In 2012—a year when it went through a prepackaged bankruptcy, brought in a number of new top corporate executives, and restructured the sales organization of its education group—total revenue at Houghton Mifflin Harcourt was relatively flat at $1.29 billion, while adjusted EBITDA rose 34.4% to $320 million. The net loss was cut to $87 million from $2.2 billion in 2011, a figure that includes a $1.7 billion impairment charge. The improvement in the bottom line was due in part to the companywide reorganization that cut about $100 million in expenses, largely from reduced labor costs.
In a conference call discussing results, CEO Linda Zecher said HMH made good progress in meeting the seven priorities the company has set for itself in order to return to profitability. Among those objectives are international expansion, shifting investment from print to digital, and more direct-to-consumer sales. Those goals apply not only to its education group but to the trade segment as well. Zecher said that a new e-commerce platform, which will unite most of HMH’s Web sites, will be released later this quarter and will be a place where parents, teachers, students and lifelong learners can find the material they want. The new platform is one way HMH is seeking alternative markets for its content, she added.
Looking at the trade group in particular, Zecher said HMH is working to build on its well-known children’s brands as it pushes harder into the consumer and preschool markets. A new Curiousgeorge.com Web site is now in beta and will be officially launched in the second quarter, Zecher said, adding that the revamped site is the first of many new steps by HMH trade to increase its direct-to-consumer presence. The company also recently acquired the curiouskids.com domain name and is leveraging its nonfiction content to create an early childhood site. On the adult side, HMH is working to broaden the digital presence of Cliffs Notes, which was one of the properties it acquired from John Wiley. Cliffsnotes.com already gets 2 million unique visitors a month and provides another avenue for the publisher to reach out directly to consumers, Zecher said.
Looking back at 2012 for the trade group, the 24.6% increase in revenue, to $157 million, was due in part to strong sales of books tied to movies, a 130% increase in e-book sales, plus the addition of the former Wiley properties, acquired in November. E-books accounted for 16% of HMH trade revenue in the year ($25 million), up from 9% in 2011. Responding to a question, Zecher said she expects e-book sales to continue to post good gains in 2013 and that she expects “no decline in the trade group business.”
A New Brand
To reflect the extensive changes HMH is making, last fall the company quietly introduced a new brand, replacing its old colophon that featured a dolphin. A company spokesperson said the decision to change HMH’s look was made “to demonstrate to the marketplace, our customers, and our employees an intent to start a new chapter as a company, in an industry going through significant transformation.” The new look, designed with the branding agency Lippincott, “reflects our mission and speaks to the customers we are serving today and will serve in the future,” the spokesperson added.
Houghton Mifflin Harcourt Results, 2011-2012 (in millions)